Michael D. Moberly – September 25, 2012

Wouldn’t it seem reasonable, even plausible, to suggest that particularly innovative companies, like, for example, Technology Reviews’ 50 Most Innovative Companies for 2012, www.technologyreview.com/tr50/2012 would likely produce (and logically) possess more, and perhaps a higher level of intangible assets than say, less innovative companies?

Let me say at the outset, being an advocate of and strategist for intangible assets, I generally hold the view that most every company, regardless of size, industry sector, or location, produces and possesses intangible assets.  It’s often a matter of revealing and unraveling them, and identifying strategies to exploit – utilize them in ways that fit best with the holder (company).

Technology Review’s annual list of the 50 most innovative companies are, relative to TR’s criteria, businesses whose innovations influence (force) other businesses to alter their strategic planning and/or course. TR50 firms are nominated by editors of Technology Review, who distinguish companies which, over the preceding year, have…

• demonstrated original and valuable technology
• are bringing that technology to market at a significant scale, and
• are clearly influencing their competitors.

Eighteen of the companies selected for 2011’s TR50, remain on their 2012 list, with seven firms achieving a third appearance. Perhaps more interesting, at least in my view, are 32 companies which TR selected for the TR50 2011 list that are no longer on the list, which readers can assume no longer meet the above (TR’s) criteria.

One example being, TR states that some companies are excluded from the list because of a decline in the prospects of an entire (their respective industry) sector.  A more specific example TR sites, has to do with advanced-biofuel companies which were strongly represented on TR’s list in both 2010 and 2011, but not in 2012.  The reason, TR offers, is that the bio-fuels sector as a whole has generally not scaled up production to a level that can begin to make sustainable inroads relative to the use of conventional oil or otherwise influence the fuel and transportation industries’ respectively. That’s not to suggest however, that advanced bio-fuel technology is now absent potential, rather, for 2012, this sector merely conveys less (sustainable) potential than it did in 2010 and 2011.

Dr. Ken Jarboe, President, Athena Alliance, www.athenaalliance.org, a highly respected, Washington-based ‘think tank’ on the intangible economy, agrees in part with my opening premise, by saying there would be a presumption that TR 50’s are stronger in intangibles than most, however, he expresses some skepticism whether this presumption should go so far as to include the full range of intellectual capital.

More specifically, Dr. Jarboe points out that TR 50’s are traditionally strong in IP (intellectual property) and technology.  Too, he says, they are probably strong ‘right now’ (emphasis added) in strategic capital and structural capital primarily because TR’s criteria for inclusion in the 50 most innovative companies includes both “vision” and “execution”.

Having strong strategic and structural capital translates, Jarboe says, as company sustainability, not just right now, but for extended, perhaps indeterminate periods.  In the case of TR50’s,

Jarboe quite correctly states they admit that they remove companies from the their list because, among other reasons, they no longer demonstrate sufficient vision and/or execution.  TR specifically mentions Netflix and Amazon as examples.  Companies that have strong strategic and structural capital Jarboe says, should not quickly lose (their) vision and/or ability to execute, both of which are key contributors to any company’s overall sustainability.

The dropping of Amazon from the list raises another question, Jarboe says, specifically about relationship capital.  The reason given by TR for removing Amazon from the list had to do with the consistent complaints about their (new) Kindle Fire.  But, Jarboe wisely and characteristically asks, was that a case that demonstrated weak intellectual capital, or was it the case that strong relational capital will help Amazon prevail over the launch glitches associated with Kindle?

So, while Jarboe believes there is a possible relationship between intangibles and the TR50, but  with this important caveat, i.e., the intangibles component is much broader and much deeper, with the TR50 really being about the successful deployment, commercially speaking, of attractive technology and accompanying applications, and not about intellectual capital, per se.

TR states in other instances, companies lose, neglect, and/or become less attentive to the vision that made them initially worthy of the TR50.  One such example is Netflix, which TR selected for its 2011 list because it piggybacked a video-on-demand service onto its existing DVD-by-mail subscriptions. Netflix had already disrupted the conventional business model of video rental stores and then cleverly engineered a maneuver to prevent itself from being disrupted in turn by streaming video technology.  But later in 2011, Netflix endeavored to split the streaming side of its operations from its DVD service.  This proved to be a less than popular decision with its substantial number of users who rather quickly became irritated which manifested in well-publicized ridicule which led to hundreds of thousands of subscribers abandoning Netflix before they could reverse course. As we now know, this led to a most unfortunate predicament in which Netflix was no longer able to direct its own (strategic) agenda, and certainly within the entertainment industry.

And finally, TR says, some companies merely fell off their list because they were crowded out by newcomer firms communicating new and all-the-more larger ideas that stir up conventions.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance.  And, I always welcome your inquiry at 314-440-3593 or [email protected]

(For this post, a special thanks  goes to Dr. Ken Jarboe, President, Athena Alliance www.athenaalliance.org for his insights and perspectives and to the fine book that I routinely rely on, Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.